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Digital Onboarding – the First Step of Your Bank’s Digitalization

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The first interaction with the potential client defines the relationship that you’re going to have. For most users, the first time they get to meet your brand is going to be on the web. And so their digital onboarding journey begins. The thing that seals off the first impression when dealing with a financial institution is the experience of your new user in the onboarding process. How can banks make a favorable first impression through smooth onboarding? Digital onboarding is the first step of your bank’s digitalization.

Digital onboarding may come from a social media ad, a blog post about choosing the right credit product, or anything else.

A customer may not register with your bank or brand at first. They many not remember the specific call to actions or value proposition. Don’t let that trick you into doing a poor job. Because next time they see you, they will already have a subconscious bias for or against your company.

Depending on the industry, the customer onboarding process differs in the number of parts and moving pieces. And for financial institutions, this process is further complicated by the regulators who demand extensive customer data to be collected for AML and KYC compliance.

In principle, the end-goal and the process are very much the same for an online retail store and a lender. But banks and other financial institutions have to be ever more precise and meticulous when collecting and proofing customer data.

The keys to building a streamlined onboarding process for financial institutions:

  1. Research user behavior to reach them when they need you.
  2. Identify the biggest churn drivers that cost you business. Don’t stress out. Gradually work towards satisfying your customers better through intelligent automation.
  3. Reduce friction every step of the way (e.g., collect user data by letting them take a picture of the driver’s license instead of forcing manual data entry).
  4. Optimize your conversion funnel to forward users from different platforms into a landing page with a personalized offer.
  5. Having warned the users, collect all the data you can about their interactions with your brand for ongoing analysis and further automation.

Users demand compliance with the latest industry standards in exchange for the privilege of doing business with them.

Having taken care of these five, you can continuously analyze and improve your onboarding process. And it doesn’t end once you create the version 1.0 of your new onboarding workflow. Due to the fast pace at which technology moves, users will always get used to the new handy features.

The importance of digital onboarding for banks.

Every third customer abandons their account due to the onboarding process being too long or too complicated. It’s the initial impression that stays with the user, and your bank has to stick the landing. In the modern world, digitalization is inevitable. And if you don’t digitize customer onboarding, they won’t of around long enough to see what you did further along in your pipeline.

The most current and the biggest challenge for traditional financial institutions are the more agile, digital-native alternative lenders and online-only banks. Without a legacy solution, they can put together and roll out sophisticated systems that serve customers better and are cheaper to manage.

Five years ago, it was mostly the alternative lenders that offered efficient digital onboarding. Now, traditional banks deploy automated onboarding solutions every day. And as a business, you can’t afford to stay behind, in the settling dust of all-consuming digitalization. So we could go on and list dozens of benefits of an efficient digital onboarding for the business but in the end, what counts are these two factors:

  • Competitive edge in the marketplace
  • And as a result, more happy clients

Competition as fierce as today’s, meeting and exceeding user expectations is vital.

If you can provide your customers with a simple, frictionless experience while reducing operational costs and improving the bottom line. All the digitalization efforts you put in can only pay you back if the onboarding process is smooth and optimized. Only then will the users see the great job you did automate your lending or banking operation (such as turn-key lending).

How to create a winning digital onboarding for a bank.

So we’ve established that digitalizing onboarding is unavoidable. The only question is if you’re going to play catch-up or will be among the pioneers who get to claim a large part of the market. And to get the most out of the onboarding process, the following things are in order:

  1. Keep iterating. Your onboarding process isn’t something you can set up and let be. If you’re operating on an outdated and clumsy legacy banking system, your first iteration won’t be perfect. Simply because you don’t know what will work before you test it. But to improve, you need the first iteration to have decent analytics tools implemented. An analytics tool will help you see the steps that challenge your customers, and from there, you’ll need to work out ways of fixing those issues. It may sound daunting, but moving even a fraction a percent, then by a fraction of a percent again, you will see the growth of the conversion rate and reduction of churn.
  2. The need to have an SSL certificate on your website is non-negotiable. But the security repercussions don’t end there. It’s highly recommended to have a security audit carried out every once in a while, and if any issues are located, they should be addressed at once. There are few things more damaging to your brand image and the trust of the new users than a personal data leak. A personal data leak is especially serious at any financial institution because of the sensitive information collected.
  3. To make sure your customers don’t feel like they’re dealing with yet another soulless corporation, you got to take measures to personalize their experience. If you’re just starting your journey of onboarding process optimization, you may want to begin with the little things like changing the copy on system messages to more human-like. So not “The user data is being processed,” but “Thanks for waiting! We’re checking your info, it won’t be long!” These small touches go a long way when building long-lasting, meaningful relationships with customers.
  4. While you take care of the user experience and CTRs, you got to keep an eye on regulatory compliance. Depending on your jurisdiction, authorities may have different requirements for the business. So it may be a good idea to take care of a new or updated compliance blueprint to build your onboarding strategy based on the AML and KYC laws your government has.
  5. No amount of bells and whistles will convert your customers if the system your company relies on is error-ridden, not integrated, and slow. That’s why it’s extremely important to approach the selection of the automation solution with extreme attention. You want an end-to-end automation platform that addresses all the needs of a single place. An end-to-end platform helps ensure effortless communication and data transfers between departments as well as reduces risk and improves the speed of your operation.
  6. Digitizing onboarding using just in-house resources isn’t sustainable. It will need constant improvements, and that leads to added overhead in the form of salaries of additional managers, coders, analytics, and designers. Thanks to the development of FinTech, banks and other financial institutions can rely on software providers to take care of that.

Operational benefits financial institutions stand to gain from automated onboarding.

Most businesses already use online banking to work with financial products. No one’s going to the bank’s branch unless there’s an emergency. Yet 60% of businesses admit that the onboarding process of their bank needs to be better. The onboarding process of a bank is a large target audience that sits there and waits for the right bank to come along and save them.

Digital onboarding can’t exist in a technological vacuum.

It should be a part of a more extensive thought-through system that automates customers’ every interaction with your company. Nonetheless, onboarding is a great spot to start the digitalization process. Because if you do it right and promote your new system to the right crowd, your business can see the following benefits almost immediately:

  • Higher conversion rate
  • Faster credit decisions
  • More accurate credit decisions
  • Improved security of the system
  • Data accessible to the front and backend users anytime from anywhere
  • Advanced analytics creates upsell and cross-sell opportunities

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